Abstract

Since 2003, the Medicine Market Regulation Chamber (CMED, in portuguese) has been responsible for establishing the maximum consumer prices (MCP) for medicines. The aim of this study is to compare prices practiced on the internet with the MCP and identify the average price difference between them in two segments of existing drugs in Brazil, the reference and the generic ones. Drug prices were collected on websites of pharmacies and drugstores and compared with their respective MCP for the year 2019. The analysis included 68 drugs and 268 commercial presentations of generic and reference drugs related to these drugs. A different pattern was observed for the average price difference in relation to the MCP in each market segment, with most generic drugs tending to show the highest differences and the reference drugs the lowest ones. The problem of price distortion in relation to the MCP pointed out by the literature was confirmed mainly in relation to the generic drug market. It was concluded that a periodic review of the MCP would be important, considering retail prices.

Key words:
Government regulation; Drugs price; Drugs generics

Introduction

In 2003, through the implementation of Law n. 10,742, the Medicine Market Regulation Chamber (CMED, Câmara de Regulação do Mercado de Medicamentos)¹1 Kornis GEM, Braga MH, Fagundes M, De Paula PAB. A regulação em saúde no Brasil: um breve exame das décadas de 1999 a 2008. Physis 2011; 21(3):1077-1101. was created, which started to establish maximum consumer prices (MCP) for medicines, as well as several other controls²2 Nishijima M, Biasoto Jr G, Lagroteria E. A competição no mercado farmacêutico brasileiro após uma década de medicamentos genéricos: uma análise de rivalidade em um mercado regulado. Economia e Sociedade 2014; 23(1):155-186.. In terms of economics literature, this meant adopting the price-ceiling model for price regulation in this market²2 Nishijima M, Biasoto Jr G, Lagroteria E. A competição no mercado farmacêutico brasileiro após uma década de medicamentos genéricos: uma análise de rivalidade em um mercado regulado. Economia e Sociedade 2014; 23(1):155-186..

The rules for the adjustment and establishment of drug prices were implemented through Article 4 of Law n. 10,742/03. Moreover, the readjustments started having a base date in March. The adjustment of drug prices is based on a pricecap model calculated based on: (1) an index - the Extended National Consumer Price Index (IPCA, Índice Nacional de Preços ao Consumidor Amplo), which is calculated by the Brazilian Institute of Geography and Statistics (IBGE - Instituto Brasileiro de Geografia e Estatística); (2) a productivity factor - expressed as a percentage and which allows passing on to consumers the productivity gains of drug-producing companies; and (3) an intra-sector relative price adjustment factor - calculated based on market power, which is determined by monopoly or oligopoly power, information asymmetry, entry barriers and others, and between sectors - calculated based on the variation of input costs, as long as such costs are not recovered by the index calculation³3 Brasil. Lei nº 10.742 de 6 de outubro de 2003. Define normas de regulação para o setor farmacêutico, cria a Câmara de Regulação do Mercado de Medicamentos - CMED e altera a Lei nº 6.360 de 23 de setembro de 1976, e dá outras providências. Diário Oficial da União 2003; 7 out..

The drug price adjustment is based on the latest Factory Price (FP). In turn, the maximum consumer price (MCP) is obtained by dividing the FP by the calculated factors, considering the tax burdens of the tax on the circulation of goods and services (ICMS, Imposto sobre Circulação de Mercadorias e Serviços) practiced in the destination states and the incidence of contribution to the social integration program and civil service asset formation program (PIS/Pasep, Programa de Integração Social/ Programa de Formação do Patrimônio do Servidor Público) and social contribution for social security financing (COFINS, Contribuição para o Financiamento da Seguridade Social). The retail trade units must keep updated drug price lists, containing the FP and MCP⁴4 Câmara de Regulação de Medicamentos (CMED). Resolução nº 1, de 26 de março de 2019. Dispõe sobre a forma de definição do Preço Fabricante (PF) e do Preço Máximo ao Consumidor (PMC) dos medicamentos em 31 de março de 2019, estabelece a forma de apresentação do Relatório de Comercialização à Câmara de Regulação do Mercado de Medicamentos - CMED, disciplina a publicidade dos preços dos produtos farmacêuticos e define as margens de comercialização para esses produtos. Diário Oficial da União 2019; 29 mar. available to consumers and consumer protection agencies.

In addition to the price adjustment rule, the CMED, through Resolution 2 of 2004, became responsible for controlling the drug entry prices, according to specific rules for each type. The types of drugs addressed in this article are: generic and reference drugs. The segment of generic drugs was implemented in Brazil in 1999, through Law 9,787, which defined these drugs as interchangeable with a reference product and may be produced after the expiration or waiver of patent protection, and must prove their efficacy, safety and quality and being designated by their Common Brazilian or International Denomination⁵5 Brasil. Lei n. 9.787. Altera a Lei n. 6.360, de 23 de setembro de 1976, que dispõe sobre a vigilância sanitária, estabelece o medicamento genérico, dispõe sobre a utilização de nomes genéricos em produtos farmacêuticos e dá outras providências. Diário Oficial da União 1999; 11 fev.. In turn, the reference drug is the innovative product registered in the National Health Surveillance Agency (Anvisa, Agência Nacional de Vigilância Sanitária) and marketed in the country, whose efficacy, safety and quality were scientifically proven by the competent federal agency at the time of the registration⁶6 Agência Nacional de Vigilância Sanitária (Anvisa). Farmacopeia Brasileira. 6ª ed., vol. I. Brasília: Anvisa; 2019. [acessado 2020 jul 25]. Disponível em: http:// portal.anvisa.gov.br/documents/33832/259143/ Volume+I+Pronto.pdf/4ff0dfe8-8a1d-46b9-84f7-7fa9673e1ee1. With the law on generic drugs, Brazil now has three differentiated market segments: reference drugs, generic drugs and similar drugs, with the latter not being addressed in this study because they may differ from reference drugs in relation to some characteristics and for being identified by brand name, unlike generic ones⁶6 Agência Nacional de Vigilância Sanitária (Anvisa). Farmacopeia Brasileira. 6ª ed., vol. I. Brasília: Anvisa; 2019. [acessado 2020 jul 25]. Disponível em: http:// portal.anvisa.gov.br/documents/33832/259143/ Volume+I+Pronto.pdf/4ff0dfe8-8a1d-46b9-84f7-7fa9673e1ee1.

Therefore, for the drugs analyzed in this study, Resolution 2, of 2004, established that: (1) for new products (Category I), the FP proposed by the company cannot be higher than the lowest FP practiced for the same product in the countries listed (Australia, Canada, Spain, USA, France, Greece, Italy, New Zealand, Portugal and the FP practiced in the country of origin of the product), adding the applicable taxes, as appropriate; (2) for Category II, new products that do not meet the previous definition, the FP will be defined based on the cost of treatment with the drugs used for the same therapeutic indication, which cannot be higher than the lowest price practiced among the countries listed; and (3) for the generic drug (Category VI), the FP cannot be higher than 65% of the price of the corresponding reference drug⁷7 Câmara de Regulação de Medicamentos (CMED). Resolução no 2, de 5 de março de 2004. Aprova os critérios para definição de preços de produtos novos e novas apresentações de que trata o art. 7º da Lei nº 10.742, de 6 de outubro de 2003. Diário Oficial da União 2004b; 5 mai..

As pointed out by Dias et al.⁸8 Dias LLS, Santos MAB, Pinto CBS. Regulação contemporânea de preços de medicamentos no Brasil - uma análise crítica. Saude Debate 2019; 43(121):543-558., the current price adjustment model has been using MCPs detached from reality, increasing information asymmetry and allowing future abusive increases. Regulatory models based on price-cap, such as the one used in Brazil, presuppose periodic realignments of prices to market values every two, up to a maximum of five years. In Brazil, this model has been used for 16 years, without any realignment, with consequent accumulated distortions between MCP and charged prices⁸8 Dias LLS, Santos MAB, Pinto CBS. Regulação contemporânea de preços de medicamentos no Brasil - uma análise crítica. Saude Debate 2019; 43(121):543-558.. The fact that periodic evaluations of the prices practiced in the market not carried out, adjusting the MCP to something closer to the market reality, seems to be a very relevant problem and with implications for the efficiency of regulation and for the well-being of consumers.

In addition, Dias et al.⁸8 Dias LLS, Santos MAB, Pinto CBS. Regulação contemporânea de preços de medicamentos no Brasil - uma análise crítica. Saude Debate 2019; 43(121):543-558. consider several other possibilities in which the regulation described above brings problems, for instance, those related to determining productivity. Moreover, for each generic drug that enters the market, a new MCP is established, which makes the monitoring of market prices more complex. Miziara and Coutinho⁹9 Miziara NM, Coutinho DR. Problemas na política regulatória do mercado de medicamentos. Rev Saude Publica 2015; 49:1-6. have already performed a brief analysis of the gap between the MCP and the charged prices, although they focused on a single Brazilian state (São Paulo) with prices being collected from physical stores between 2009 and 2012.

In this article, however, a survey of drug prices practiced on the websites of the largest pharmacy and drugstore chains in Brazil is used, with some of these being regional networks and others operating throughout the country. Despite the diversity of these networks’ performance, the surveyed prices correspond to the standard of their own websites, and it is not possible to say that they are identical and cover all regions. Moreover, this article differs from the study carried out by Miziara and Coutinho⁹9 Miziara NM, Coutinho DR. Problemas na política regulatória do mercado de medicamentos. Rev Saude Publica 2015; 49:1-6. in that it discusses how the determination of the MCP can affect in different ways two drug segments found in Brazil, namely, reference and generic drugs.

The information asymmetries caused by the dissociation of the prices practiced in the market in relation to the established MCP indicate the need for periodic evaluation of the market prices of drugs in Brazil and their implications for the consumers’ well-being. These results can be extremely relevant for the CMED assessment of drug price regulation.

The aim of the article is to compare prices practiced on the internet by Brazilian pharmaceutical retailers with the MCP established by CMED and generate new evidence on the regulation of drug prices in Brazil. It also aims to answer the following research questions: Is there any pattern for the difference between charged prices and MCP in the Brazilian market of generic and reference drugs?

Method

Some private institutions have databases on retail prices; however, access is restricted or may only be available under certain circumstances (e.g., IQVIA, available at https://www.iqvia.com/). Considering the non-availability of a public database for the purposes of this study, a search method was developed for surveying drug prices on websites, as described below.

The list of pharmacies and drugstores available on the website of the Brazilian Association of Pharmacy and Drugstore Networks (ABRAFARMA, Associação Brasileira de Redes de Farmácias e Drogarias)¹⁰10 Associação Brasileira de Redes de Farmácias e Drogarias (ABRAFARMA). [acessado 2019 jan 20]. Disponível em: https://www.abrafarma.com.br/
https://www.abrafarma.com.br... , which include the largest pharmacy and drugstore chains in Brazil, was the basis for data collection on the internet. Based on this list, pharmacies and drugstores that had websites and that allowed the collection of information were selected. The selected pharmacies and drugstores, as well as other information, are depicted in Chart 1.

As for the geographic location of pharmacies and drugstores, it is observed that: (1) Droga Raia operates throughout the south region and in the states of São Paulo, Rio de Janeiro, Minas Gerais, Goiás and Mato Grosso do Sul¹¹11 Droga Raia [acessado 2019 out 21]. Disponível em: http://drogaraia.com.br/nossa-historia
http://drogaraia.com.br/nossa-historia... ; (2) Drogasil in the south, southeast and midwest regions and in the states of Bahia, Pernambuco, Sergipe, Alagoas, Paraíba and Rio Grande do Norte¹²12 Drogasil [acessado 2019 out 21]. Disponível em: https://www.drogasil.com.br/nossa-historia
https://www.drogasil.com.br/nossa-histor... ; (3) Pacheco Drugstores in the states of Rio de Janeiro, Minas Gerais, Espírito Santo, Goiás, Paraná and Distrito Federal¹³13 Drogarias Pacheco [acessado 2019 out 21]. Disponível em: https://www.drogariaspacheco.com.br/institucional/drogarias-pacheco
https://www.drogariaspacheco.com.br/inst... ; (4) São Paulo Drugstore in the states of São Paulo, Minas Gerais, Rio de Janeiro, Bahia, Pernambuco, Paraíba and Alagoas¹⁴14 Drogaria São Paulo [acessado 2019 out 21]. Disponível em: https://www.drogariasaopaulo.com.br/institucional/drogarias-sao-paulo
https://www.drogariasaopaulo.com.br/inst... ; (5) Panvel throughout the south region and in the state of São Paulo¹⁵15 Panvel [acessado 2019 out 21]. Disponível em: https:// www.panvel.com/panvel/institucional.do?secao=quemSomos
https:// www.panvel.com/panvel/instituci... ; (6) Pague Menos Pharmacy in all states and the Distrito Federal¹⁶16 Pague Menos [acessado 2019 out 21]. Disponível em: http://portal.paguemenos.com.br/portal/empresa#0
http://portal.paguemenos.com.br/portal/e... ; (7) Araujo Drugstore in Belo Horizonte and some cities in the state of Minas Gerais¹⁷17 Drogaria Araujo [acessado 2019 out 21]. Disponível em: https://www.araujo.com.br/conteudo-empresa
https://www.araujo.com.br/conteudo-empre... ; (8) Nissei Pharmacies in the states of Paraná, São Paulo and Santa Catarina¹⁸18 Farmácias Nissei [acessado 2019 out 21]. Disponível em: https://www.farmaciasnissei.com.br/sobre-nos
https://www.farmaciasnissei.com.br/sobre... ; (9) Venancio Drugstore exclusively in the state of Rio de Janeiro¹⁹19 Drogaria Venancio [acessado 2019 out 21]. Disponível em: https://www.drogariavenancio.com.br/institucional/sobre
https://www.drogariavenancio.com.br/inst... ; and (10) Rede Drogal in the countryside of the state of São Paulo²⁰20 Drogal [acessado 2019 out 21]. Disponível em: https:// www.drogal.com.br/quem-somos/s
https:// www.drogal.com.br/quem-somos/s... .

Price collection took place through a programming language developed by the authors in Visual Basic for Applications (VBA) of Microsoft Office Excel. It was built to extract data on drug description, brand name and price directly from the websites of pharmacies and drugstores. These data were organized in an Excel database that was used as the basis for this study. The collection on the internet was carried out between September 11 and 16, 2019.

The choice of drugs, schematically represented in Figure 1, was carried out by convenience. The steps considered comprised: (1) selection of therapeutic subclasses that were identical in two time periods, namely 2001 and 2016 (for more details see Souza²¹21 Souza CMA. A regulação do preço dos medicamentos genéricos no Brasil [dissertação]. Rio de Janeiro: Universidade Federal do Rio de Janeiro; 2020.); (2) research of drugs from the selected therapeutic subclasses; (3) verification of which reference drugs had generic counterparts; (4) collection of prices of drugs that were sold in pharmaceutical retail; and (5) exclusion of those that did not have 20% MCP established by CMED.

Regarding the last step, it is worth noting that some drugs do not have an MCP because they are: (1) drugs with free prices (CMED Resolution n. 02/2019); or (2) exempt from ICMS²²22 Câmara de Regulação de Medicamentos (CMED). Preços máximos de medicamentos por princípio ativo, atualizada em 01/07/2019 [acessado 2019 ago 28]. Disponível em: http://portal.anvisa.gov.br/documents/374947/2829072/LISTA+CONFORMIDADE _2019-07-01.pdf/d3cffaba-8cc5-49b2-a3c4-b 0230686a975
http://portal.anvisa.gov.br/documents/37... . In addition, ICMS varies according to the state of sale and there are six ranges, which vary between 0% and 20%. For data analysis, only extreme ICMS values of 20% were considered - referred to hereafter as MCP (20%). This is a study limitation, as the ICMS variability by state was not evaluated.

Price collection was carried out only for generic and reference drugs. Generic drugs are marketed by the name of their active ingredient, that is, by the name of the drug, facilitating its identification with the reference drug to which they are interchangeable, according to the legislation. The reason for not searching for similar drugs is that, despite the requirement for interchangeability, which exists since 2003, it is not immediately evident because the drug is marketed under its own brand and the guarantee of interchangeability is only included in the drug package insert²³23 Agência Nacional de Vigilância Sanitária (Anvisa). Medicamentos similares intercambiáveis [acessado 2021 fev 18]. Disponível em: http://antigo.anvisa.gov.br/medicamentos-similares
http://antigo.anvisa.gov.br/medicamentos... . Furthermore, there is a delay in meeting the requirement schedule by Anvisa to define the interchangeability of similar drugs. For these reasons, their inclusion in the price comparability would require additional search procedures.

Therefore, the generic correspondents of reference drugs were searched in generic drug registrations at Anvisa based on the generic drug registration list of August 5, 2019²⁴24 Agência Nacional de Vigilância Sanitária (Anvisa). Lista de registros de medicamentos genéricos, atualizada em 05/08/2019 [acessado 2020 out 22]. Disponível em: https://www.gov.br/anvisa/pt-br/assuntos/ medicamentos/genericos/estatisticas/arquivos/6457json-file-1
https://www.gov.br/anvisa/pt-br/assuntos... . To verify whether the drug was marketed in retail, a survey on available prices was carried out in the selected websites. Chart 2 shows the final set of the convenience sample consisting of 68 drugs and the brand names of the reference drugs. The price survey was obtained for 268 commercial presentations of generic and reference drugs for analysis (all analyzed commercial presentations are found in the Chart 3).

To compare with the prices collected on the internet, CMED²²22 Câmara de Regulação de Medicamentos (CMED). Preços máximos de medicamentos por princípio ativo, atualizada em 01/07/2019 [acessado 2019 ago 28]. Disponível em: http://portal.anvisa.gov.br/documents/374947/2829072/LISTA+CONFORMIDADE _2019-07-01.pdf/d3cffaba-8cc5-49b2-a3c4-b 0230686a975
http://portal.anvisa.gov.br/documents/37... maximum price list of drugs per active ingredient was used, hereafter referred to as CMED Price List, updated on July 1, 2019. The MCP is the maximum price that can be charged by the retail trade of drugs and contemplates both the marketing price margin and the taxes inherent to these types of trade²²22 Câmara de Regulação de Medicamentos (CMED). Preços máximos de medicamentos por princípio ativo, atualizada em 01/07/2019 [acessado 2019 ago 28]. Disponível em: http://portal.anvisa.gov.br/documents/374947/2829072/LISTA+CONFORMIDADE _2019-07-01.pdf/d3cffaba-8cc5-49b2-a3c4-b 0230686a975
http://portal.anvisa.gov.br/documents/37... .

The procedures for calculating differences in charged prices and the MCP required some attention. As for each generic drug there was an MCP established by a company, correspondences were made between the drug with the price collected at retail and its respective MCP (20%), which should have the same characteristics (same drug, presentation, pharmaceutical form and manufacturer). Therefore, the average of the MCPs (20%) informed by the CMED Price List was calculated. For the reference drugs, as there was a single MCP, it was not necessary to calculate an average for the MCPs (20%). When collecting data from different pharmacies, several and different prices were obtained for each commercial presentation of the drug collected on the internet. Aiming to establish a reference point for comparison with the MCP (20%), the average charged prices were calculated per presentation, both for generic and reference drugs.

The results were divided into two ranges of analysis according to the most frequent patterns of percentage mean difference, namely: (1) upper range, with a percentage mean difference of -60%, where the 12 highest price differences were concentrated; and (2) the lower range, with a percentage mean difference of -10%, where the nine lowest price differences were concentrated. Moreover, general data are presented with a percentage mean difference of -40%, which was used as a divisor for the highest number of drugs, either generic (greater than 40%) or reference ones (less than 40%).

Results

The results show a distinct behavior of charged prices regarding the reference and generic drugs in relation to the MCP. Of the 134 commercial presentations of reference drugs, only 13 had mean prices that were more than 40% below the MCP (20%). While, of the 134 commercial presentations of generic drugs, 96 had mean prices that were more than 40% below the average MCP (20%). Therefore, it was possible to observe a pattern for the distancing of prices arising from the market segment, in which generic drugs, mostly (72%), tended to have percentage mean differences in prices that were more than 40% below the MCP, and most of the reference drugs (88%) tended to have percentage mean differences that were less than 40% below the MCP.

This result seems to indicate a market dynamic that induces generic drugs to be quite distant from the MCP that can be practiced, due to competition between them, and that, in the reference segment, the charged price of drugs is closer to their respective MCP, showing the strength of the brand even in the face of competition with generic drugs.

It was also possible to observe that the percentage mean differences between the charged prices and the MCP in general varied widely, including drugs that had percentage mean price differences of -83% compared to the MCP and drugs that were sold at higher prices (24%) than their MCPs.

As shown in Table 1, among the drugs with mean charged prices that were more than 60% below the average MCP (20%), only two were reference ones: “Cymbalta” and “Prozac”, while all others were generic drugs. Therefore, a predominance of generic drugs with prices much farther from the MCP when compared to the reference drugs was observed. Also in relation to Table 1, it is possible to note that, among the drugs with a mean charged price that was lower than 10% below the mean MCP (20%), only “Sodium Divalproate” was a generic drug, while all others were reference ones.

In the data analysis, the existence of drugs that had higher charged prices than their respective MCPs (20%) were identified, namely: the drug “Cosopt” with a concentration of “2%/0.5%”, which had the highest charged price, of R$134.36, found in the collection and respective MCP (20%), of R$ 131.43; and the drug “Lyrica” with a concentration of “75mg”, with the highest price identified in the collection, of R$ 227.70, and respective MCP (20%), of R$152.19. In these two cases, the commercialization was infringing the regulation that determines the maximum price that can be charged in the market for these drugs.

Discussion

In this article, only one of the problems of price regulation pointed out in the literature was investigated, i.e., the distortion of prices practiced in relation to the MCP.

The evidence observed in the collection of charged prices confirms the presence of this problem in Brazilian regulation, broadening the perception previously expressed in the article by Miziara and Coutinho⁹9 Miziara NM, Coutinho DR. Problemas na política regulatória do mercado de medicamentos. Rev Saude Publica 2015; 49:1-6.. The main argument to explain the greater distancing regarding the price of generic drugs may be the number of discounts offered by the manufacturers of these drugs to encourage the sale of their products, as identified by Palmeira Filho²⁵25 Palmeira Filho PL. Catch-up da indústria farmacêutica nacional e financiamento à inovação: o caso da atuação do BNDES através do Profarma [tese]. Rio de Janeiro: Universidade Federal do Rio de Janeiro; 2013..

As observed in this study, the percentage mean differences between charged prices and MCPs were quite significant, especially regarding generic drugs, of which approximately 72% of these drugs tended to have differences that were more than 40% below the MCP, which is imposed on them. Therefore, it can be inferred that the price-cap imposed by CMED on drugs in this segment in the Brazilian market seems to be so high that it ends up undermining the objective of the regulation itself for generic drugs and, in this case, competition seems to be the main factor of stimulus to price reduction²¹21 Souza CMA. A regulação do preço dos medicamentos genéricos no Brasil [dissertação]. Rio de Janeiro: Universidade Federal do Rio de Janeiro; 2020..

In 2012, the report of Ruling 3,016 of the Federal Accounting Office (TCU, Tribunal de Contas da União)²⁶26 Tribunal de Contas da União (TCU). Acórdão 3016/2012 - plenário. Processo 034.197/2011-7 [acessado 2021 fev 18]. Disponível em: https://pesquisa. apps.tcu.gov.br/#/documento/acordao-completo/*/KEY%253AACORDAO-COMPLETO-1250289/ DTRELEVANCIA%2520desc/0/sinonimos%253D-false
https://pesquisa. apps.tcu.gov.br/#/docu... had already recommended the Ministry of Health to review and correct the regulatory model provided for in Law n. 10,742/03, in order to dissociate readjustments from the inflation. After finding that 86% of the drugs in a drug sample with the highest billing had a price above the international mean, with 46% having the highest price in Brazil, they also recommended the periodic review of prices based on criteria such as international comparison, exchange rate variation and costs of the different treatments. The §9 of Article 4 of Law 10,742/03 states that, exceptionally, a negative price adjustment can be determined on August 31, 2003. However, the current price reduction by the adjustment formula is not foreseen.

The Court ruling gave rise to a public consultation, which culminated in the change of parameters for calculating the price adjustment, showing that some degree of change in the way the parameters are calculated is feasible, even though the current law is in force⁸8 Dias LLS, Santos MAB, Pinto CBS. Regulação contemporânea de preços de medicamentos no Brasil - uma análise crítica. Saude Debate 2019; 43(121):543-558.. This became clear with the publication of the Provisional Measure (MP, Medida Provisória) 754/16²⁷27 Brasil. Medida Provisória nº 754, de 19 de dezembro de 2016. Diário Oficial da União 2016; 20 dez.. CMED now has the possibility of determining the downward adjustment of the current price⁹9 Miziara NM, Coutinho DR. Problemas na política regulatória do mercado de medicamentos. Rev Saude Publica 2015; 49:1-6.^,2828 Sarai L, Pscheidt KR. Regulação de preços de medicamentos: o Estado está no caminho certo? Revista de Direito Econômico e Socioambiental 2018; 9(2):140172.. However, this MP was terminated in the same year, after a letter of explanatory memorandum²⁹29 Brasil. E.M.I. nº 00052/2016/MS/CC-PR/MDIC/MJC. Brasília, 12 de dezembro de 2016. [acessado 2021 fev 18]. Disponível em: http://www.planalto.gov.br/ccivil_03/_Ato2015-2018/2016/Exm/Exm-MP-754-16. pdf
http://www.planalto.gov.br/ccivil_03/_At... stating that “the negative price adjustment must occur, exceptionally, when price distortions are observed, in order to promptly attack the detected distortions, provide a balance of conditions and generate greater competitiveness in the market”.

Another aspect that may explain the observed results is that the market dynamics for generic and reference drugs occur in different ways. For generic drugs, competition tends to occur via prices or discounts, whereas for reference drugs, competition for differentiation of products distinguished by patents and brands predominates²2 Nishijima M, Biasoto Jr G, Lagroteria E. A competição no mercado farmacêutico brasileiro após uma década de medicamentos genéricos: uma análise de rivalidade em um mercado regulado. Economia e Sociedade 2014; 23(1):155-186.^,3030 Hasenclever L, Fialho B, Klein H, Zaire C. Economia Industrial de Empresas Farmacêuticas. Rio de Janeiro: E-papers; 2010.. Therefore, the competition between reference and generic drugs, even after patents expire, occurs under different conditions. Brand loyalty guarantees a price-inelastic demand for reference drugs; and the perception of the generic as interchangeable between several generics and the reference drug makes demand elastic to price³⁰30 Hasenclever L, Fialho B, Klein H, Zaire C. Economia Industrial de Empresas Farmacêuticas. Rio de Janeiro: E-papers; 2010..

This market dynamics may be one of the reasons that make generics distance further from the MCP than the reference drugs. This point was corroborated by Dantas and Mendonça³¹31 Dantas AT, Mendonça PAS. Impactos concorrenciais da entrada dos medicamentos genéricos no mercado farmacêutico brasileiro de 2003 a 2007. Análise Econômica 2014; 32(58):101-124. when they showed that the price reduction policy through the introduction of generics is an indirect way of controlling prices, since it acts on competition and not on the characteristics that directly define prices. The model adopted by the authors suggested that a type of market segmentation may be occurring due to the increase in the distance between the prices of generic and reference drugs³¹31 Dantas AT, Mendonça PAS. Impactos concorrenciais da entrada dos medicamentos genéricos no mercado farmacêutico brasileiro de 2003 a 2007. Análise Econômica 2014; 32(58):101-124..

As demonstrated by the results, the determination of the MCP by CMED seems to make much more sense for the reference drugs, which have been charging prices very close to their MCPs. Miziara and Coutinho⁹9 Miziara NM, Coutinho DR. Problemas na política regulatória do mercado de medicamentos. Rev Saude Publica 2015; 49:1-6. also observed that the mean prices of drugs practiced in pharmacies and drugstores were far below the MCP. Between 2009 and 2012, 44 of the 129 charged prices showed a variation greater than 20% between the mean of prices practiced and the MCPs. This disparity, according to the authors, depicts the limits of drug price regulation carried out in Brazil, which is unable to pressure the prices of a significant number of drugs to levels below those determined by the industry. In addition, as shown by Dias et al.⁸8 Dias LLS, Santos MAB, Pinto CBS. Regulação contemporânea de preços de medicamentos no Brasil - uma análise crítica. Saude Debate 2019; 43(121):543-558., the mean practiced “discounts” in relation to prices ceiling increased from 34.69% in 2012 to 41% in 2016, that is, a greater tendency towards the distancing of prices has been observed the over the years. As this regulation has never been revised, the increase in the distancing between the charged prices and MCPs has progressed, potentially causing losses to consumers.

In this same sense, Monte³²32 Monte RG. Regulação jurídica e econômica do mercado de medicamentos: fundamento, desafios e impactos regulatórios [dissertação]. Pernambuco: Universidade Federal de Pernambuco; 2019. points out that what has been observed is a fragmented and ineffective regulation, considering that fixed prices are distorted, being incapable of preventing abusive adjustments. Such distortions allow the practice of high commercialization margins, even after the end of the patent validity period, when one supposed that the costs of research and development had already been paid. The conclusion reached by Monte³²32 Monte RG. Regulação jurídica e econômica do mercado de medicamentos: fundamento, desafios e impactos regulatórios [dissertação]. Pernambuco: Universidade Federal de Pernambuco; 2019. is that the current regulatory model does not guarantee the expansion of access to medicines, nor the reduction of prices, nor the interest of companies in increasing productivity and reducing costs. The evaluation and monitoring of fluctuations in the final prices of drugs are essential, along with communication with other data systems and price records, so that CMED can truly act as a regulatory agency. To curb the abusive prices imposed by the pharmaceutical industry, the way, without a doubt, is the transparency in the establishment of prices and joint actions by state entities³²32 Monte RG. Regulação jurídica e econômica do mercado de medicamentos: fundamento, desafios e impactos regulatórios [dissertação]. Pernambuco: Universidade Federal de Pernambuco; 2019..

As already stated by Miziara and Coutinho⁹9 Miziara NM, Coutinho DR. Problemas na política regulatória do mercado de medicamentos. Rev Saude Publica 2015; 49:1-6., the main reasons for observing these considerable differences between the MCP and the charged prices are the absence of effective monitoring of drug prices at points of sale by CMED and the lack of legal provision for the possibility of reduction in the regulated drug prices. In 2017, amidst controversies, CMED even issued Interpretive Guidance No. 2, clarifying that the CMED Price List is just a price ceiling list⁸8 Dias LLS, Santos MAB, Pinto CBS. Regulação contemporânea de preços de medicamentos no Brasil - uma análise crítica. Saude Debate 2019; 43(121):543-558.. However, it makes no sense to believe that a regulation is only intended to serve as a price list that depicts maximum prices, but it is not capable of effectively pushing drug prices down, without exerting any kind of pressure on the pharmaceutical industry. Therefore, although the CMED Price

List is just a simple price ceiling list, it has ceased to perform its main function, i.e., pressuring down drug prices in Brazil, becoming innocuous in many ways.

This understanding is also expressed by Maluf³³33 Maluf E. O controle de preço de medicamentos. Revista de Direito Sanitário 2011; 12(1):67-84., who states that the CMED is an important regulatory agency and cannot be restricted to the mere issuing of price lists. Maluf³³33 Maluf E. O controle de preço de medicamentos. Revista de Direito Sanitário 2011; 12(1):67-84. states that the matter of inadequate standards, or inappropriate interference, in addition to making access to medicines difficult, does not solve the issue of their lack, further aggravating the problem, intensifying the market’s own inequalities and failures; moreover, it scares away the economic agents and their investments, leaving the population more deprived of medicines, concluding that poor regulation is even worse than the absence of regulation.

The model that determines the price ceiling in Brazil is used for drugs in general, whether it is a generic or a reference one. The price readjustment, however, differs by the degree of concentration at which these drugs act. Nevertheless, it was possible to observe that reference drugs have kept their prices closer to the established ceiling than generic ones, which tend to further detach their prices from the MCPs. In Norway, as shown by Brekke et al.³⁴34 Brekke KR, Grasdal AL, Holmas TH. Regulation and pricing of pharmaceuticals: reference pricing or pricecap regulation? Eur Econ Rev 2009; 53:170-185., when the price-cap model was in force, mandatory only for the reference drugs, they observed that the price of these drugs tended to fluctuate close to the established ceiling, while the price of generic drugs tended to show a significant decrease. Thus, the adoption of the price-cap model for generic drugs as well, such as the one currently practiced in Brazil, may be one of the factors that has led to the ineffectiveness of the current regulation.

As pointed out by Delgado³⁵35 Delgado JS. Medicamentos: o preço da saúde. Revista de Direito Setorial e Regulatório 2015; 2(1):269-288., economic regulation must adopt new strategies to correct or adjust the cost of drugs for the final consumer, who does not have or has little access to drugs considered essential in a market in which the creation and development of new drugs have a higher value. The author suggests that competitive conditions in this market make access to drugs for the population a challenging issue, hindering the achievement of what is expected from good regulation, that is, maximizing social and consumer welfare, without harming the pharmaceutical production chain and vice-versa.

Recently, amidst the COVID-19 pandemic, although the readjustment of drug prices has been postponed for two months, some experts observed that this would not solve the problem of rising drug prices on the market. This would occur mainly because, as discussed in this article, manufacturers have a wide margin that allows them to increase drug prices within the current legal limit established by CMED. The readjustment does not tend to directly impact on drug prices, but on the price ceiling. As this ceiling is very high, in practice it does not limit the prices of these products, as stated by Ana Navarrete from the Brazilian Institute of Consumer Protection³⁶36 Junqueira D. Coronavírus: remédios devem subir, mesmo após governo adiar reajuste. Repórter Brasil; 2020 abr 03 [acessado 2020 jun 16]. Disponível em: https://economia.uol.com.br/noticias/redacao/ 2020/04/03/coronavirus-remedios-devem-subir-mesmo-apos-governo-adiar-reajuste.htm
https://economia.uol.com.br/noticias/red... .

After two months of drugs price readjustment suspension, the Federal Government authorized the readjustment of drug prices for 2020 on June 1^st. According to the CMED resolution published in the Brazilian Federal Register, the maximum adjustment allowed for 2020 would be applied in three ranges, of 5.21%, 4.22% and 3.23%, depending on the type of drug. The ceiling of the authorized increase for 2020 is higher than that of the previous year, which was 4.33%. However, on June 2, 2020, the Senate approved a bill (PL 1,542/2020) that aims to extend the suspension period for drug price readjustments to 120 days. The proposal would still have to be voted by the House of Representatives³⁷37 Após suspensão, governo autoriza reajuste de até 5,2% nos preços dos medicamentos. Estadão; 2020 jun 02 [acessado 2020 jun 16]. Disponível em: https:// revistapegn.globo.com/Banco-de-ideias/Saude/noticia/2020/06/pegn-apos-suspensao-governo-autoriza -reajuste-de-ate-52-nos-precos-dos-medicamentos. html
https:// revistapegn.globo.com/Banco-de-... ^,3838 Aprovada suspensão de reajuste de remédios e de planos de saúde. Agência Senado; 2020 jun 02. [acessado 2020 jun 16]. Disponível em: https://www12.senado. leg.br/noticias/materias/2020/06/02/aprovada-suspensao-de-reajuste-de-remedios-e-de-planos-desaude
https://www12.senado. leg.br/noticias/ma... .

What has been observed in practice, despite the fact that the prices of drugs have not been readjusted, are several complaints from consumers regarding the increase in drug prices during the Covid-19 pandemic³⁹39 Variação no preço de medicamentos pode chegar a 200%, em Goiânia. Globoplay; 2020 maio 1 [acessado 2020 jun 16]. Disponível em: https://globoplay.globo. com/v/8525999/
https://globoplay.globo. com/v/8525999... ^,4040 Com alta no preço de Azitromicina, Cloroquina e Tamiflu, Procon notifica farmácias de Manaus. G1 AM; 2020 maio 19 [acessado 2020 jun 16]. Disponível em: https://g1.globo.com/am/amazonas/ noticia/2020/05/19/com-alta-no-preco-de-azitromicina-cloroquina-e-tamiflu-procon-notifica-farmarcias-de-manaus.ghtml
https://g1.globo.com/am/amazonas/ notici...

41 Procon realiza fiscalização em farmácias e drogarias de Belém. Globoplay; 2020 maio 22 [acessado 2020 jun 16]. Disponível em: https://globoplay.globo.com/v/8573264/
https://globoplay.globo.com/v/8573264... ^-4242 Escassez de medicamentos e preços altos preocupam consumidor. Globoplay; 2020 maio 01 [acessado 2020 jun 16]. Disponível em: https://globoplay.globo.com/v/8526229/
https://globoplay.globo.com/v/8526229... . However, when allegations of abusive pricing practices are analyzed by the Consumer Protection and Defense Program (PROCON, Programa de Proteção e Defesa do Consumidor), it is observed that prices are within the limits established by CMED. This confirms what was observed in this article, that at certain times there is a huge margin that manufacturers can use to raise drug prices, which are often far below the ceiling.

Among the limitations of this article, we can mention: (1) the variety of values established for the ICMS, which was not taken into consideration; (2) the use of data on drug price and availability collected only from the internet, which may differ from charged prices in physical stores; (3) the non-differentiation between charged prices per state; (4) the use of a small and convenient sample of drugs; (5) the use of a price sample related to a single moment in time; (6) the non-inclusion of independent pharmacies, using only the large chains; and (vii) the non-inclusion of similar drugs.

Final considerations

Based on the study presented in this article, it was possible to observe that there has been a significant gap between the charged prices and the MCPs established for drugs in Brazil. The differences between charged prices and MCPs were quite significant, especially regarding generic drugs, where about 72% of these drugs tended to show differences that were more than 40% below the MCP. Whereas approximately 88% of the reference drugs tended to have price differences that were less than 40% below the MCP.

This greater distancing between charged prices and MCPs allows, in times of crisis, such as the COVID-19 pandemic, pharmaceutical companies to increase the price of their products in the market, without disrespecting the current regulation. It is noteworthy that this can happen not only in times of crisis, but the fact that the crisis reinforces the space that these companies have. For this reason, it is important that periodic assessments of market prices and a realignment of established price ceilings occur, especially for generic drugs, so that the charged prices are not higher than those that should in fact prevail.

In conclusion, it can be acknowledged that the price ceiling imposed on drugs has made more sense for reference drugs than for generic ones. For this reason, it is expected that the results of this article can alert about the need for in-depth evaluations on the method used to establish a price-cap for drugs in Brazil, complementing the evidence pointed out herein, which indicate the need for a review of the currently adopted regulation.

References

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